Managing Business Debt

Managing Business Debt

As a small business owner you may be facing tough financial challenges in the coming years. You may be concerned about the economy and your business debt. First take a look and your immediate and projected cash flow. If your expenses are outpacing your income you may want to look at some parts of your business and where you make be able to save some money. First, see how drastic you challenge is including the cash flow disparagy and how much your financial situation varies from prior years. Next, see what can you cut back on, that may not affect your day to day operations. Items such as; printed materials for inner office memos, etc, billing, paper checks, etc. What frivolous expenses can you cut back on, office supplies; monthly contracts i.e., on items leased such as printers and website contracts. These savings can be in the thousands of dollars.

Next take a look at your phone system, how many lines do you have, are they all necessary, and shop out new phone services that may save on long distance and local calls or voice over IP’s. Can you combine faxes and phones, share lines and change your internet service provider or trade off for less speed.

Don’t be afraid to contact all vendors and renegotiate terms or see what they have to offer you. Remember it is in their best interest to keep you on as a customer, in these economically challenging times. They need you and your money just as much as any business need customers and money. Call your phone carriers, ISP, credit cards and other vendors, shop for better rates and terms. Try to get rid of all high interest credit cards and payments. Get rid of magazine and other unnecessary subscriptions and memberships in organizations that aren’t immediately benefiting your business.

Make sure you are working with a good CPA that can advise you on what to do throughout the year to benefit from good business practices to ensure that you don’t get behind in taxes and you are taking all write offs you are entitled to for your business.

Look at the location from where you are operating your business. Ask yourself, can you go to a smaller office, change location, and reduce square footage, share space with another company or even work from home. Check all of your business insurance and look for where you can cut back as well. Review all of your benefits such as health insurance, look into higher deductibles.

You should review all employees to make sure you have no dead weight. Such as employees that don’t directly make you money. Do you have any redundant staff positions; are you over paying in the current market? This includes your salary. Is it time to cut back your income from what you were making during the better years? Next review where you can cut back on employee benefits, retirement and health insurance. Don’t run your business into the ground due to pride or loyalty, if your business goes under not only your remaining employees will lose out, but you could spend years paying off debt or being forced into bankruptcy. Don’t be afraid to sit down with your employees and tell them about the decisions you have to make to ensure you are protecting their jobs.

In the long run you may not need to cut out just one major expense but benefit more from many smaller cut backs which could add up. Also see if any of your services or products, you could actually raise rates on, even a minimal amount can add up over a year.

This is where the person in the big chair, you, has to make some tough decisions. If you get through this you will come out stronger on the other end and be one of the survivors in your industry poised for a comeback when the economy does rebound.

"Where Website Development & Video Production Come Together"Stephen Showalter started a local business and built it up to a national company that he sold in 1995. During this time he developed strategies for a national company brand and developed a national training company that included marketing strategies.

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Copyright 2008

Stephen Showalter
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